Start trading cryptocurrency
What is cryptocurrency trading?
Cryptocurrency trading is speculation on the price movements of digital currencies. This type of trading includes the exchange of one cryptocurrency for another, the purchase and sale of coins, as well as the exchange of fiat money for cryptocurrency.
Crypto trading usually revolves around buying/selling assets rather than owning any of the real coins. You exchange one cryptocurrency for another in order to sell an asset at a better price.
To practice trading in Nigeria without the risk of losing real money, try trading on demo accounts, as well as open a small deposit at first. To do this, register on the online platform.
Start of trading
How to start trading cryptocurrency in Nigeria? One of the tools that allow you to trade cryptocurrencies is currency pairs. To start trading, for example, with a pair of USD / BTC, you need to go to the exchange, put a deposit on your account, enter a deal cheaper, exit more expensive (or vice versa). Everything is the same as in normal trading.
Depending on the level of the trader, you can use 4 trading strategies:
- Scalping. Beneficial for pairs with a high spread (to recapture the size of the commission). The purchase is carried out using a limit order, followed by a quick sale. Profit is made at the expense of the number of transactions.
- Exchange arbitrage. A trader buys for dollars a certain amount of cryptocurrency, which he sells for another type of cryptocurrency, and again buys dollars. Chain example: dollar-ether-bitcoin-dollar. With proper implementation, it brings up to 0.5% profit on one transaction.
- Trading volatility. The trader chooses an instrument with high volatility, and using the skills of technical analysis, calculates the risks, finds profitable entry and exit points from transactions.
- Marginal trading. Gives the trader the opportunity to increase the potential profit at the expense of the agreed multiplier - leverage. In fact, such exchange-based lending can only benefit very disciplined traders. After all, non-compliance with risks in marginal trading threatens with losses.
Most popular coins to trade
As soon as the money you deposited is available for use on the platform, a diverse selection of cryptocurrencies will open up.
The most popular cryptocurrencies are Ethereum and Bitcoin.
You can identify a cryptocurrency by its abbreviation "ticker". For example, BTC is the ticker symbol for Bitcoin. Here are other popular cryptocurrencies:
- Bitcoin Cash;
- Tether (USDT);
- Ethereum (ETH);
- Cardano (ADA).
Depending on the cryptocurrency you choose, you may not be able to buy the whole coin due to its huge price. Fortunately, many exchanges allow you to buy parts of coins.
Instead of buying 1 BTC, you can buy a hundredth or any other derivative unit of bitcoin.
Stick to your trading plan
A trading plan is one of the most important things in cryptocurrency investing. It defines how you buy and sell cryptocurrencies. The trading plan consists of the following components:
- Object of application of market efforts;
- Risk map.
By following a trading plan, you stay focused and only target trades that match your parameters and recommendations. The most important part of a trading plan is following it. Change your plan only if you have found the best trading method.
Cryptocurrency trading plan aligns your strategy with market movements. Thus, you can set yourself investment goals.
What's more, a trading plan allows you to manage risk and limit portfolio losses. You can prevent unnecessary losses by maintaining a fixed risk/reward ratio.
The Best Technical Analysis Indicators for Cryptocurrencies
A professional trader uses the best tools to monitor market changes. Technical analysis indicators will make this process easier.
The task of a professional trader is to predict how the situation on the market will change, because it is an accurate forecast that can bring profit and properly start trading cryptocurrency.
Trading indicators are actively used by professional traders in the financial markets, including cryptocurrencies. These tools work well with popular strategies and analytics, provide additional data and help create a clearer picture of the market.
The main purpose of indicators is to generate trading signals that allow you to open a position to sell or buy an asset at the right time.
Experienced traders usually use two or three indicators in their work to confirm signals, which is called a trading strategy. It is allowed to use more, but in this case the noise increases. In addition, it is difficult to choose the settings for a large group of indicators for one market situation and chart period, so many strategies are focused on only one or two indicators and certain settings.
Currently, a large number of different indicators are available to the cryptocurrency trader, which came to this new market from traditional financial ones. For convenience, they are divided into four main groups:
- Volume indicators show the overall market activity over a given period.
- Trend indicators allow you to timely determine the emerging trend and its direction.
- Oscillators are the main indicators of technical analysis, which are used to determine trend reversal points when opening trades in the opposite direction.
- Indicators based on moving averages - tools that show price changes over certain periods.
A trend is the general direction of market movement. In technical analysis, market trends are determined by price action, trend lines, or even key moving averages.
There are two main market trends - bullish and bearish. A bull market means a steady uptrend in which prices are constantly rising. A bear market means a sustained downtrend in which prices are constantly falling.
Moving Average Index
One of the main indicators of technical analysis today is the moving average. When prices fluctuate up or down, their movement can be misinterpreted as a reversal or trend continuation. The MA (moving average) indicator calculates the average price over time and also recalculates it over time.
Short periods have little effect on the Moving Average indicator because it uses long time frames. By looking at the moving average chart, you can identify support and resistance levels.
Support is a lower "barrier" that price is unlikely to break. The resistance level is opposite to the support level - this is also in a sense a barrier that is above the current price level, and it is unlikely that it will be possible to overcome it confidently.
Thus, the MA indicator makes it easy to see support and resistance levels for altcoins.
Another popular trading indicator is Bollinger Bands. This tool is based on the simple moving average (SMA). Two identical SMAs, shifted by a standard deviation, are located above and below, forming a corridor within which the price moves most of the time. The narrowing of the channel indicates a decrease in the volatility of the asset, the expansion indicates growth.
Breakout trading means opening trades at the moment when the price crosses one of the borders. If the upper value is overcome, a sell deal is opened, if the lower one, then a deal to buy cryptocurrency is opened. Breakouts can happen quite often. Therefore, you should react to signals only in cases where the price has crossed the border, having moved from the opposite or at least the center line.
Fibonacci retracement levels
What is a correction on the cryptocurrency quotes exchange? This is not only a decrease, but also an increase in quotes, which goes against the trend, but does not stop or change it completely.
For example, there was a decrease in the cryptocurrency market by 25% over the year, but in 2 days it unexpectedly grew by 5%, then the fall continued. This is the correction. The price seems to be correcting towards its fair value after it has grown rapidly due to the high activity of buyers, but the upward trend does not stop.
The grid lines correspond to the moments when the course change becomes different. Based on this, several recommendations can be made:
- Before buying a token, put a Fibonacci grid on the chart of its fluctuations and wait until the quotes reach the nearest level. As soon as it is reached, fix the maximum and continue waiting: it is not profitable to buy at this moment, as investors start selling tokens and the price of them falls. Wait until the quotes go to the area of the previous level, and when this happens, immediately buy coins.
- To sell a digital asset, overlay the Fibonacci grid on the chart and see where the altcoin rate is now relative to it. As soon as quotes show this mark, place an order to sell your coins. Selling at the highest price, most likely, will not work (many investors will simultaneously form their orders), but the profit will be close to the maximum.
If you did not have time to create a sell / buy order on time, and the quotes left the Fibonacci levels, all that remains is to wait. It is unprofitable to do something with tokens at the moment when the rate fluctuates between two Fibonacci values. There is a great chance that the quotes after the action (buying or selling) will rush to the wrong place, and you will either receive less profit or even be at a loss.
It is profitable to sell and buy cryptocurrency at any Fibonacci level. When using Fibonacci levels, it is important to remember that no trend in any market (including cryptocurrency) lasts forever: an uptrend or downtrend will always be followed by a correction. The task of the trader is to guess at what point the turning point will occur, and it is profitable to sell or buy tokens.
Fibonacci levels have shown their effectiveness over decades of trading on stock exchanges. Many traders are guided by this tool.
What is the Relative Strength Index (RSI)?
The Relative Strength Index is one of the most common and popular technical indicators.
The Relative Strength Index (RSI) is an indicator that shows whether an asset is overbought or oversold. This is a momentum oscillator that shows the rate of price change. It is given a range of 0 to 100 and is usually displayed as a line on a graph.
If the market dynamics increases and the price rises, then the uptrend can be considered strong. And vice versa: if the market dynamics decreases with a rising price, then the uptrend will be weak. In this case, a reversal may occur.
Let's take a look at how the traditional interpretation of the RSI indicator works. When the RSI value is below 30, the asset is considered oversold. The asset will become overbought when the RSI is above 70.
However, RSI can reach extreme levels under unusual market conditions - and even then, the current market trend may continue for some time.
The RSI determines the relative strength of the market, which makes this oscillator an invaluable tool that can be used in almost any market. Numerous use cases for the RSI indicator allow traders to incorporate it into a variety of trading strategies and use it as a supporting indicator to back up their guess or conclusion.
Remember that effective trading in the cryptocurrency market is impossible without a professional approach. Even the most advanced indicators will not be able to make the right decision for you. Only experience, the ability to analyze the market and understand its dynamics will help you become a real professional trader.
You can start trading cryptocurrency in Nigeria today. Sign up and start making good profits.